Arbitration Tide Turning?

Gradually over the last 15 years or more it seems there has been a swelling tidal wave in favor of mandatory arbitration agreeements. I’ve always been suspicious when people with money and power (like large corporations and legislatures) become in favor of keeping aggrieved people out of the court system. Why? Whatever happened to faith in the concept of just as much justice as you can afford?

Recently, however, it appears the tide is turning. In May the Pennslvania Supreme Court heard a case by referral from the Third Circuit on whether arbitration clauses in consumer contracts are unenforceable adhesion contracts. In June, the 8th Circuit refused to compel arbitration when requested by a mortgage company in a Bankruptcy Adversary Proceeding. Later in June, the Oklahoma Supreme Court went to great lengths to call arbitration clauses in consumer contracts adhesion contracts that are neither freely negotiated nor understood by consumers. Oklahoma has a strong legislative history of favoring arbitration, but the Oklahoma Supreme Court still mentioned, in dicta, that the law was starting to take a more active role in protecting consumers from abuse. (Bilbrey v. Cingular Wireless, L.L.C., 2007 OK 54.)

Now in July, H.R. 3010 (Fairness in Arbitration Act) has been referred to the House Committee on the Judiciary; and S. 1782 has been referred to the Senate Committe on the Judiciary. The House bill has, as far as I can tell, 8 co-sponsers. The Senate bill is sponsored by Sen. Durbin.

Let’s hope that this is the first step in taking back rights that most of us take for granted — until we discover we don’t have them anymore.

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One thought on “Arbitration Tide Turning?”

Has there ever been a case of compulsory arbitration going to the Supremes? I can’t recall, but don’t know for sure. To me, this violates all basic Constitutional rights, compelling both parties in any kind of litigation or contract to deal, and settle, whether they like it or not. It would be nice if, sometime soon, a high court will cast some clarity on this issue.